Tuesday 3 May 2022

The cost of minimum pricing


When minimum unit pricing was introduced in Scotland in May 2018 it became illegal to sell alcohol for less than 50p per unit. One of the SNP’s flagship policies, it aimed to reduce alcohol-related harms, including death and crime, by raising the price of the cheap, off-trade alcohol that is often associated with harmful drinking. Lacking the power to raise alcohol duty itself, the Scottish government turned to minimum pricing as a way of using the price mechanism to reduce consumption. It was assumed that reducing consumption would lead to a decline in the associated harms.

Even if it worked, this would clearly come at a cost to many drinkers. How much it would cost was contested, with advocates of the policy insistent that moderate drinkers would barely be affected. Although Public Health Scotland is currently evaluating minimum pricing, the financial impact on consumers has not yet been investigated. 

And so, in a study published by the Institute of Economic Affairs over the weekend, John Duffy, Mark Tovey and myself used off-trade sales figures to estimate the cost of minimum pricing to Scottish consumers in the four years since it was implemented. We believe it exceeds a quarter of a billion pounds. Our midpoint estimate is £270 million. That works out at £59.39 per adult or £71.12 per drinker.

Minimum pricing is currently being evaluated by MESAS for Public Health Scotland. So far, they have struggled to find any benefits from the policy. Looking at the data from the past four years, we were also unable to find any discernible impact on crime, absenteeism, unemployment, hospitalisations or deaths, all of which were projected to improve after the policy was implemented. Admittedly, some of the projected benefits were so small that they would be difficult to identify in aggregate data, but all of the key indicators have remained unchanged or worsened since minimum pricing began.

Read the full report here.

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